Trade and Tax Reforms in a Cash-in-Advance Economy
We examine the effects of both tariff-only and coordinated trade-tax reforms on market access, government revenue and welfare for a small monetary economy, under the assumption that a certain fraction of purchases of each good must be ?nanced with cash held in advance. We show that if the cash requirement ratio in the exportable sector is greater than that in the importable then, contrary to previous results: i) a uniform radial reduction of tariffs has ambiguous effects on both welfare and market access, ii) tariff and consumption tax reforms that leave consumer prices unchanged may be more efficient in improving market access and welfare than a reform that involves only tariffs and iii) export and production tax reforms that keep producer prices unchanged may be welfare deteriorating.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chin, Chi-Ting & Guo, Jang-Ting & Lai, Ching-Chong, 2009. "Macroeconomic (in)stability under real interest rate targeting," Journal of Economic Dynamics and Control, Elsevier, vol. 33(9), pages 1631-1638, September.
- Hatzipanayotou, Panos & Michael, Michael S. & Miller, Stephen M., 1994. "Win-win indirect tax reform : A modest proposal," Economics Letters, Elsevier, vol. 44(1-2), pages 147-151.
- Chi-Chur Chao & Chong Yip, 2000. "Urban unemployment and optimal trade policy in a cash-in-advance economy," Journal of Economics, Springer, vol. 71(1), pages 59-77, February.
- Theodore Palivos & Chong K. Yip, 2006.
"Optimal Intervention Policies for a Small Monetary Economy,"
Departmental Working Papers
_178, Chinese University of Hong Kong, Department of Economics.
- Theodore Palivos & Chong Yip, 2006. "Optimal Intervention Policies for a Small Monetary Economy," Journal of Economics, Springer, vol. 88(1), pages 69-85, June.
- Rod Falvey & Udo Kreickemeier, .
"Tariff Reforms with Rigid Wages,"
07/29, University of Nottingham, GEP.
- Theodore Palivos & Chong K. Yip, 1997.
"The Gains from Trade for a Monetary Economy Once Again,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 30(1), pages 208-23, February.
- Theodore, Palivos & Chong K. Yip, 1996. "The Gains from Trade for a Monetary Economy Once Again," Departmental Working Papers _071, Chinese University of Hong Kong, Department of Economics.
- Tatsuo Hatta, 1977. "A Theory of Piecemeal Policy Recommendations," Review of Economic Studies, Oxford University Press, vol. 44(1), pages 1-21.
- Chao, Chi-Chur & Yu, Eden S. H., 1999. "Shadow prices and trade restrictions in a monetary economy," Journal of Macroeconomics, Elsevier, vol. 21(4), pages 755-764.
- Keen, Michael & Ligthart, Jenny E., 2002.
"Coordinating tariff reduction and domestic tax reform,"
Journal of International Economics,
Elsevier, vol. 56(2), pages 489-507, March.
- Michael Keen & Jenny E Ligthart, 1999. "Coordinating Tariff Reduction and Domestic Tax Reform," IMF Working Papers 99/93, International Monetary Fund.
- Emran, M. Shahe & Stiglitz, Joseph E., 2005.
"On selective indirect tax reform in developing countries,"
Journal of Public Economics,
Elsevier, vol. 89(4), pages 599-623, April.
- M. Shahe Emran & Joseph E. Stiglitz, 2002. "On Selective Indirect Tax Reform in Developing Countries," International Trade 0210003, EconWPA.
- Hatta, Tatsuo, 1977. "A Recommendation for a Better Tariff Structure," Econometrica, Econometric Society, vol. 45(8), pages 1859-69, November.
- Theodore, Palivos & Chong K. Yip, 1996. "The Effects of Import Quotas on National Welfare: Does Money Matter?," Departmental Working Papers _072, Chinese University of Hong Kong, Department of Economics.
- Chi-Chur Chao & Chong Yip, 2001. "Non-traded goods and optimal trade policy in a cash-in-advance economy," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 10(1), pages 23-37.
- Emran, M. Shahe, 2005. "Revenue-increasing and welfare-enhancing reform of taxes on exports," Journal of Development Economics, Elsevier, vol. 77(1), pages 277-292, June.
When requesting a correction, please mention this item's handle: RePEc:mcd:mcddps:2010_07. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Theodore Panagiotidis)
If references are entirely missing, you can add them using this form.